Stroll around a few restaurants in Reno, Nev., and you’ll likely hear chatter among friends about the sales prices of their neighbors’ houses. Real estate veteran Lyle Martin said the topic of conversation among residents in this market is reminiscent of past housing booms during which owning a home seemed to be the most important subject on everyone’s mind.
But while sellers are seeing dollar signs, buyers are panicking, according Martin, founder and co-owner of Assist-2-Sell, a national full-service brokerage that sells homes at discounted commission rates. He said more buyers are turning every month to the company’s Web site in search of home-buying assistance.
“We don’t have a market time of days; we have a market time of hours,” he said.
Martin’s observations indicate home buyers’ confidence in the real estate market is stronger than ever–strong enough that most are willing to pay more than they’d planned to buy a house that isn’t exactly what they wanted.
The Conference Board today reported that its consumer confidence index increased slightly this month from last month, due to strong employment gains. But while overall consumer confidence is a factor in the housing markets, it may not be as important as home buyer confidence.
Are home buyers confident about housing as an investment? Take a survey.
And yet such confidence in real estate and the buying frenzy that has resulted in many markets has a downside. Some prospective buyers eventually grow weary of competing with other buyers and walk away in defeat. Martin said a co-worker in his franchise office had been trying to buy a home this spring, but became so frustrated with the bidding wars she decided to continue renting instead.
Buyers’ desperation triggers a certain “greed factor” among home sellers, according to Martin. Once they realize they can get more money, they’re on alert for any excuse to put their home back on the market at a higher price even after it’s been sold.
“One little thing goes wrong and they’re ready to kill the deal,” he said.
At the national level, prospective home buyers are flocking to the Internet to do their home shopping. The number of unique visitors searching for homes on Realtor.com increased to 6.4 million in April, the first month when the number of users broke the 6-million mark, according to company spokesperson Erin Campbell.
“We have seen traffic to Realtor.com steadily increase for the most part month to month,” she wrote in an e-mail message.
Users of the national real estate listing portal spent an average 48 minutes, or 19 minutes per visit, on the Web site during the month in the first four months of 2004. That was up from about 42 minutes, or 18 minutes per visit during the month in the first four months of 2003.
The increase in Realtor.com traffic could be due at least in part to new users of Realtor.com’s co-branded Web site with MSN House & Home, yet the numbers still suggest people are more curious than ever about buying a home.
John Perkins, COO of Homes.com, which also displays for-sale listings on its Web site, said traffic and time spent searching for homes has remained steady, with some increases, although the company hasn’t noticed any significant changes in consumer behavior on the Web site.
“People are still staying on the site the same (amount of time) or a little longer,” he said.
Buyers in Massachusetts are still plentiful, but the urgency to buy has faded somewhat, according to Jeffrey Bastress, broker/owner of Back Roads Real Estate in Sterling, Mass. Bastress, who uses the Web to generate most of his leads, said he cut back some of his pay-per-click advertising because his buyer-client database has filled up in recent months.
Higher interest rates and a stronger local job market have pushed a lot of wait-and-see buyers off the fence, he said. But the number of sellers has also increased. That rise in for-sale homes inventory has taken off some of the bidding wars pressure.
“(Buyers) are taking much more time. If, in their opinion, a home is even 3-5 percent overpriced, they will pass on it and look at others. So the pressure to buy the first home that meets some or most of their criteria has diminished,” Bastress said.
Buyers’ confidence in real estate values coupled with steadily rising interest rates has resulted in more move-up buyers as well.
“Many feel if they don’t buy now, they may never have the same buying power again in the form of low rates,” Bastress said. “So they are buying the finest home they can possibly afford.”
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